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    MU
    Earnings call· Nov 2025(Q1 FY26)

    MICRON TECHNOLOGY INC MU

    Dec 17, 2025 Source

    Executive summary

    Micron Q1 FY26 — Record Revenue and Strong HBM Demand

    Micron delivered record Q1 FY26 results, driven by strong execution and tight supply conditions, particularly in HBM. The company has secured its entire calendar 2026 HBM supply and significantly raised its HBM TAM outlook, underscoring memory's critical role in AI. Despite increased CapEx to boost supply, demand continues to outpace availability, leading to strong pricing and profitability.

    Highlights

    5

    • Q1 FY26 revenue of $13.6 billion, gross margin of 56.8%, and EPS of $4.78 all exceeded the high end of guidance.

    • Completed agreements on price and volume for entire calendar 2026 HBM supply, including industry-leading HBM4.

    • HBM TAM CAGR projected at approximately 40% through calendar 2028, reaching around $100 billion two years earlier than prior outlook.

    • Fiscal Q1 free cash flow was a record $3.9 billion, exceeding the prior record by over 20%.

    • Returned to a net cash balance of over $250 million after reducing debt by $2.7 billion.

    Concerns

    3

    • Aggregate industry supply for DRAM and NAND is expected to remain substantially short of demand through and beyond calendar 2026, with Micron only able to meet 50% to 2/3 of demand from several key customers in the medium term.

    • Memory supply constraints may affect some PC unit shipments in 2026.

    • Potential new tariffs are not included in the company's guidance.

    Guidance & targets

    19
    CategoryTargetConfidence
    Revenue
    $18.7 billion, plus or minus $400 million
    high materiality
    High
    Gross Margin
    68% plus or minus 100 basis points
    high materiality
    High
    Operating Expenses
    approximately $1.38 billion plus or minus $20 million
    medium materiality
    High
    Non-GAAP EPS
    $8.42 per share plus or minus $0.20
    high materiality
    High
    Capital Expenditure
    approximately $20 billion
    high materiality
    High
    Effective Tax Rate
    around 15.5%
    medium materiality
    High
    Free Cash Flow
    significantly higher free cash flow year-over-year
    high materiality
    High
    Server Unit Growth
    high teens percentage range
    medium materiality
    High
    PC Unit Sales Growth
    high single-digit percentage range
    medium materiality
    High
    Smartphone Unit Volumes Growth
    low single-digit percentage range
    low materiality
    High
    DRAM Bit Demand Growth
    low 20% range
    high materiality
    High
    NAND Bit Demand Growth
    high teens percentage range
    high materiality
    High
    Industry DRAM Bit Shipments Growth
    around 20% from 2025 levels
    high materiality
    High
    Industry NAND Bit Shipments Growth
    around 20% from 2025 levels
    high materiality
    High
    Micron DRAM Bit Shipments Growth
    approximately 20%
    high materiality
    High
    Micron NAND Bit Shipments Growth
    approximately 20%
    high materiality
    High
    HBM TAM CAGR
    approximately 40%
    high materiality
    High
    HBM TAM
    around $100 billion
    high materiality
    High
    HBM TAM
    approximately $35 billion
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Cloud Memory Business Unit (CMBU)
    Represented 39% of total company revenue. Driven by an increase in bit shipments and higher prices. Gross margins higher by 620 basis points sequentially supported by cost execution and higher pricing.
    		$5.3 billion—16%66%
    Core Data Center Business Unit (CDBU)
    Represented 17% of total company revenue. Driven by robust bit shipments and higher pricing. Gross margins up 990 basis points sequentially, supported by higher pricing and cost execution.
    		$2.4 billion—51%51%
    Mobile and Client Business Unit (MCBU)
    Represented 31% of total company revenue. Driven by higher pricing, partially offset by lower bit shipments. Gross margins up 17 percentage points sequentially, driven primarily by higher pricing.
    		$4.3 billion—13%54%
    Automotive and Embedded Business Unit (AEBU)
    Represented 13% of total company revenue. Driven by higher bit shipments and higher pricing. Gross margins up 14 percentage points sequentially, driven primarily by higher pricing.
    		$1.7 billion—20%45%

    Operational metrics

    31
    Non-GAAP EPS
    $4.7858% sequential growth and 167% versus the year ago quarter
    Q1 FY26

    Non-GAAP diluted earnings per share.

    Non-GAAP Gross Margin
    56.8%up 11 percentage points sequentially
    Q1 FY26

    Consolidated gross margin. Improvement driven by higher pricing with strong cost execution and favorable mix.

    Operating Expenses
    $1.3 billionup $120 million quarter-over-quarter
    Q1 FY26

    In line with guidance range. Sequential increase driven by higher R&D expenses in support of technology and product development.

    Operating Income
    $6.4 billion
    Q1 FY26
    Operating Margin
    47%up 12 percentage points sequentially and 20 percentage points year-over-year
    Q1 FY26
    Effective Tax Rate
    15.1%
    Q1 FY26
    Capital Expenditures
    $4.5 billion
    Q1 FY26
    Ending Inventory
    $8.2 billiondown $150 million sequentially
    Q1 FY26
    Days of Inventory
    126
    Q1 FY26

    DRAM inventory days remained tight and below 120 days.

    Cash and investments balance
    $12 billion
    Q1 FY26

    At quarter end.

    Total Liquidity
    $15.5 billion
    Q1 FY26

    Including untapped credit facility.

    Debt Reduction
    $2.7 billion
    Q1 FY26

    Paid off $1 billion balance of term loans and redeeming $1.7 billion of senior notes.

    Total Debt
    $11.8 billion
    Q1 FY26

    At quarter end.

    Net Cash Balance
    over $250 million
    Q1 FY26

    Returned to net cash.

    Share Repurchases
    $300 million
    Q1 FY26

    As permitted by the terms of the CHIPS agreement.

    Diluted Share Count
    approximately 1.15 billion
    Q2 FY26 guidance

    Used for EPS guidance.

    HBM TAM CAGR
    approximately 40%
    through calendar 2028

    From approximately $35 billion in 2025 to around $100 billion in 2028. $100 billion milestone projected 2 years earlier than prior outlook.

    Server Unit Growth
    high teens percentage rangehigher than last earnings call outlook of 10%
    calendar 2025

    Expected to continue in 2026.

    PC Unit Sales Growth
    high single-digit percentage rangeabove prior expectations of mid-single digits
    calendar 2025

    Demand drivers expected to continue in 2026, but memory supply constraints may affect some PC unit shipments.

    Smartphone Unit Volumes Growth
    low single-digit percentage range
    calendar 2025
    Flagship Smartphone DRAM Content
    12 gigabyteshipment mix increased to 59%, more than twice the level from a year ago
    calendar Q3

    For flagship smartphones.

    DRAM Revenue
    $10.8 billionup 69% year-over-year
    Q1 FY26

    Sequentially, DRAM revenue increased 20%. Bit shipments up slightly, prices increased approximately 20%.

    NAND Revenue
    $2.7 billionup 22% year-over-year
    Q1 FY26

    Sequentially, NAND revenue increased 22%. Bit shipments increased in the mid- to high single-digit percentage range, prices increased in the mid-teens percentage range.

    Data Center NAND Portfolio Revenue
    exceeded $1 billion
    Q1 FY26
    AI Usage in Workforce
    over 80%total usage up tenfold since last year
    current

    Of professional workforce actively uses GenAI.

    AI in Manufacturing Yield Management
    half
    current

    Cut root cause identification time by half in cases.

    AI in Coding Teams Productivity Gains
    30% or more
    current

    Using agentic AI.

    LPDRAM Server Modules Power Consumption
    1/3
    current

    LPDRAM server modules consume 1/3 the power of DDR DRAM server modules.

    LP SOCAMM2 Capacity Increase
    50%
    current

    192 gigabyte LP SOCAMM2 product enables a 50% increase in capacity per module.

    Rack Scale LPDRAM Density
    over 50 terabytes
    current

    With 192 gigabyte LP SOCAMM2 product.

    LPDDR6 Performance and Power Efficiency
    over 50%
    next-gen

    LPDDR6 will deliver over 50% higher performance and improved power efficiency.

    Industry KPIs

    6
    MetricValueDetails
    Ai data center revenueRecord
    Bookings net order intakeentire calendar 2026 HBM supply
    Design wins socket pipelinebillions of dollarsUSD
    Inventory channel inventory$8.2 billionUSD
    Node platform ramp schedule1-gamma DRAM node; G9 NAND node
    End market segment revenue mixCMBU: $5.3B (39%); CDBU: $2.4B (17%); MCBU: $4.3B (31%); AEBU: $1.7B (13%)USD

    Orderbook & backlog

    1
    HBM Supplyentire calendar 2026 supplyQ1 FY26

    Agreements on price and volume completed, including Micron's industry-leading HBM4. Sold out for 2026.

    Product announcements

    6
    ProductTypeDetails
    192 gigabyte LP SOCAMM2launch
    PCIe Gen6 SSDlaunch
    QLC based 122 and 245 terabytes, G9 SSDslaunch
    1-gamma 16 gigabit LPDDR6 productlaunch
    1-gamma LP5x 24-gigabit productlaunch
    1-gamma LP5x 16 gigabit productlaunch

    Deals & partnerships

    1
    Several key customersLong-term supply agreements for DRAM and NAND with specific commitments.multiyear

    Customers are concerned about long-term access to adequate memory in the environment we are heading into. Contracts are different from prior LTAs with stronger structures and specific commitments.

    Capital programs

    6
    First Idaho Fabunderway

    Benefit: first wafer output

    Pulling in timeline, earlier than prior expectation of second half calendar 2027.

    Second Idaho Fabannounced
    Start: 2026

    Construction to begin in 2026 and be operational by the end of 2028.

    First New York Fabannounced
    Start: early calendar 2026

    Benefit: provide supply

    Making good progress on securing necessary permits. Plan to break ground in early calendar 2026.

    Hiroshima Fab Expansionunderway
    Funding: support of METI

    Benefit: increase production scale and optimize fab economics

    Adding cleanroom space to support advanced nodes and future DRAM technology transition in coordination with Boise R&D team.

    HBM Advanced Packaging Facilityon track

    Benefit: contribute meaningfully to HBM supply

    Located in Singapore. Expected opportunities for synergies between NAND and DRAM production.

    Assembly and Test Facilitypilot production initiated

    Located in India, will ramp in 2026.

    Risks & headwinds

    3
    Aggregate industry supply for DRAM and NAND will remain substantially short of demand.foreseeable future, through and beyond calendar 2026

    Micron only able to meet about 50% to 2/3 of demand from several key customers in the medium term.

    Mitigation: Maximizing production output from current footprint, ramping industry-leading technology nodes, investing in new cleanroom space, increasing fiscal 2026 CapEx to approximately $20 billion.

    Memory supply constraints may affect some PC unit shipments.2026

    Some unit demand may get impacted, given semiconductor prices here, given memory prices here.

    Mitigation: Accounted for in forecast; AI experience across edge devices requires more memory, driving content growth.

    Potential new tariffs.

    Any impacts that may occur due to potential new tariffs are not included in our guidance.

    What to watch in Q2 FY26

    5

    Gross Margin Trajectory

    Beyond Q2 FY26 (May quarter)
    Current56.8% in Q1 FY26, guided to 68% in Q2 FY26
    TargetContinued expansion, but more gradual growth

    Why it matters

    Gross margin expansion is a key indicator of pricing power and cost execution in a tight supply environment, directly impacting profitability.

    We did indicate that we would -- our business would strengthen through the year. And so we do believe margins can be up. We do believe that they will be up for DRAM and NAND. Now keep in mind that at these high gross margin levels, mathematically, we get less in gross margin percent for the same increase in price. So yes, we would expect gross margins to expand beyond fiscal Q2, but we would expect that growth to be more gradual than what we've seen in the last couple of quarters or the first quarter and the second quarter guide.

    Q&A highlights

    5

    Inquired about the nature and duration of multiyear customer LTAs, specifically if they extend into 2027 or 2028 and if they bundle HBM with other memory types.

    Sanjay Mehrotra confirmed discussions for multiyear contracts involving DRAM and NAND with specific, stronger commitments than prior LTAs, but declined to give specifics on terms or duration beyond stating they are multiyear.

    “These are multiyear contracts that we are in discussions with several of our key customers. And these contracts, of course, involve DRAM as well as NAND. And with respect to terms, of course, these contracts that we are under discussions for are very different from prior LTAs. They have specific commitments in them and much stronger contract structure.”

    asked by Timothy Arcuri · answered by Sanjay Mehrotra

    2 min read5 chapters

    Detailed Narrative

    01

    Record Financial Performance and HBM Leadership

    Micron achieved record Q1 FY26 revenue of $13.6 billion, gross margin of 56.8%, and EPS of $4.78, all exceeding the high end of guidance. This strong performance was driven by execution across end markets and products in a tight supply environment. The company has completed agreements for its entire calendar 2026 HBM supply, including HBM4, and projects the HBM TAM to reach $100 billion by 2028, two years ahead of prior estimates, underscoring memory's critical role in AI.

    02

    Technology and Product Differentiation

    Micron maintains technology leadership with its 1-gamma DRAM node and G9 NAND node ramping well, which will be primary drivers of bit growth in calendar 2026. The company is developing 1-delta and 1-epsilon DRAM nodes for future differentiation. In NAND, Micron introduced the world's first PCIe Gen6 SSD leveraging G9 NAND, securing rapidly increasing qualification commitments, including at hyperscalers. The company also began sampling its breakthrough 1-gamma 16 gigabit LPDDR6 product for AI at the edge, promising over 50% higher performance and improved power efficiency.

    03

    AI-Driven Demand and Supply Constraints

    The extraordinary multiyear data center build-out, driven by AI, is significantly increasing demand for high-performance memory and storage. Server unit growth for calendar 2025 is now expected in the high teens percentage range, up from 10%. Despite this, aggregate industry supply for DRAM and NAND is projected to remain substantially short of demand through and beyond calendar 2026, with Micron currently meeting only 50% to 2/3 of demand from several key customers in the medium term.

    04

    Strategic Capacity Expansion

    Micron is increasing its fiscal 2026 CapEx to approximately $20 billion (up from $18 billion) to support HBM and 1-gamma supply, accelerating equipment orders and installation timelines. The company is pulling in the first Idaho fab timeline to mid-calendar 2027, starting construction on a second Idaho fab in 2026 for 2028 operation, and plans to break ground on its first New York fab in early calendar 2026 for 2030 supply. Investments are also being made in Japan for advanced nodes and in Singapore for HBM advanced packaging, with an assembly and test facility in India initiating pilot production.

    05

    Multiyear Customer Engagements and Contract Structure

    Micron is engaged in discussions for multiyear contracts with several key customers across multiple market segments, involving both DRAM and NAND. These new contracts are described as having specific commitments and stronger structures compared to prior LTAs, which were typically one-year agreements. This shift reflects customers' increasing concern about long-term access to adequate memory supply in the current tight market environment.

    AI-generated summary of the company’s earnings call. Not investment advice.